There’s a point in everyone’s life where the only thing that stands between them and their total independence is a running vehicle - and usually, this is also the point in your life where you’re going to need money to pay for that running vehicle. Let’s face it: applying for an auto loan, and financing a car was easier when your grandparents were doing it! If you want to finance a car in this day and age, it can seem like a much more difficult task. However, it doesn't have to be.
Here’s what you should know if you’d like to apply for a loan and finance a car.
One of the easiest ways to finance a car is to do it right at the dealership. Pre-owned and new vehicles on the floor can both qualify for dealership financing. This option allows you to purchase a great car at a good deal, with a moderate interest rate over the life of the loan.
Car finance is like any other loan on the market, though with the difference that banks and vehicle financiers don’t charge the same interest rates. Sometimes vehicle finance plans carry higher interest rates than you wouldn’t see from a bank or credit union.
Car dealerships can also have very strict requirements for who they are willing to grant loans to. If your credit score does not check out or if you have had previous bad credit history, then you are less likely to get a direct-from-dealership vehicle loan.
Bank and credit unions are the second stop for people looking for auto financing options. Specific loans that are meant for car finance are available from most banks and large institutional lenders. At banks and credit unions, interest rates are generally lower than a loan from the dealership.
Don’t just walk into any bank and choose a credit solution. Take your time and research the banks and credit unions with the best auto loan rates available. Make an appointment with a manager and talk about the various credit solutions you could have available to you.
If you have bad credit or a previous bad credit report history, then you might be less likely to get this type of financial aid. The good news is that you’re not out of options yet.
Sometimes, though you might not qualify for a traditional car loan from a bank or credit union, you might be able to get a general cash loan for the same amount.
A vehicle loan takes many things into account, including your prior driving history and insurance. For some people, this means disqualification. A cash loan takes your credit score into consideration and doesn’t paint your credit profile with such a narrow brush.
There are many consumers who can’t get a direct vehicle loan but will qualify for a cash loan for the same value (or close).
If you have been rejected from one traditional form of loan, find another.
Private lender services don’t have to mean big, scary people who break knuckles on late payments. These days, there are online solutions that act as a platform to match lenders with people looking for auto loans. This can be a good way to get cash for a vehicle when you need it.
What you do with the cash through private lender services is left up to you, as long as you are able to stick to your end of the repayment agreement. As with any loan, you will be held liable if you fail to meet loan payment obligations.
If you don’t have the ability to qualify for a new vehicle loan, you might consider a used vehicle loan.
Used vehicle loans often come with reduced terms. Car buyers are more likely to get a loan for a cheaper used car if they have already been refused a similar loan for a larger amount.
A buy here, pay here car lot is a type of used car dealership where the dealership itself provides the financing for the vehicles they sell, rather than relying on outside lending institutions. Customers make their payments to the dealership directly, rather than to a bank or other financial institution. These car lots often focus on selling vehicles to customers with poor credit or no credit.
There are a few potential advantages of buying a car from a "buy here pay here" lot: